Amazon: The Significance Of 'Gadget Day'

Sep. 28, 2020 10:22 AM ETAmazon.com, Inc. (AMZN)BRK.A, BRK.B, JPM, WMT29 Comments
Michael Fitzsimmons profile picture
Michael Fitzsimmons
19.66K Followers

Summary

  • Amazon held its Fall "Hardware Event" last week, announcing several very interesting new products - my favorite being the new Ring "Always Home Cam" security drone.
  • While cool new gadgets create buzz and are sure to lead to more sales, the second order effect is more important: growing the Prime subscriber base.
  • This year, "Gadget Day" was held prior to Prime Day - which will actually be two days and is rumored to be on October 13-14.
  • Add these developments to a fast-growing and high-margin advertising business, and it looks like investors should think twice before rotating out of this big-tech stock.

Amazon (NASDAQ:AMZN) held its much-anticipated Fall "Hardware Event" this week. I call it "gadget day" because I can't help but think of "Inspector Gadget" every time I hear of the new products Amazon announces. Yet, as impressive, affordable, and disruptive as some of the new products and services are, for Amazon, the significance of Gadget Day extends far beyond more gadget sales. The second order effect is that Amazon wants to convert gadget buyers into Prime member subscribers. And once you're a Prime Member, it's similar to the last lines of The Eagles' song "Hotel California":

We are programmed to receive. You can check out any time you like, but you can never leave.

Hotel California lyrics Universal Music Publishing Group, BMG Rights Management; Songwriters: Glenn Frey/Don Felder/Don Henley

Translation: once a consumer experiences the many benefits and services of being a Prime member, they'll continue to renew year-after-year. And the new gadgets will draw more consumers to the Amazon website and, subsequently, to Prime.

Without a doubt, my favorite product of this year's Gadget Day was the new Ring "Always Home Cam" shown below. It's a fully autonomous surveillance drone that flies around your house - on a mapped path which you can program - and then re-docks itself for charging once the reconnaissance flight has reported to you and completed its mission. The device is integrated with the already highly successful Ring Alarm, which can trigger a launch of the drone cam and a pre-programmed "alarm" flight plan. The Always Home Cam is expected to start shipping next year and to cost $250. You can watch a short video of the security cam here.

Source: The Verge

In a blog post, Ring developer Jamie Siminoff said:

Instead of simply encouraging customers to buy more cameras and set them

This article was written by

Michael Fitzsimmons profile picture
19.66K Followers
Technology stocks, ETFs, portfolio strategy, renewable energy, and O&G companies. Primary goal is growing net-worth. I typically allocate a portion of my own portfolio and devote some of my SA articles to small and medium sized companies offering compelling risk/reward propositions. I am an Electronics Engineer, not a qualified investment advisor. While the information and data presented in my articles are obtained from company documents and/or sources believed to be reliable, they have not been independently verified. Therefore, I cannot guarantee its accuracy. I advise investors conduct their own research and due-diligence and to consult a qualified investment advisor. I explicitly disclaim any liability that may arise from investment decisions you make based on my articles. Thanks for reading and I wish you much investment success!

Disclosure: I am/we are long AMZN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I am an engineer, not a CFA. The information and data presented in this article were obtained from company documents and/or sources believed to be reliable, but have not been independently verified. Therefore, the author cannot guarantee their accuracy. Please do your own research and contact a qualified investment advisor. I am not responsible for the investment decisions you make.

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